The US Stock Market has been in existence since 1792. We have had several market drops and panics since the beginning, 1907, 1914, 1929, 1973, 1987, 2001, 2008, 2010. These market drops seem to have a cyclical pattern. We have also had some great Bull Markets such as the 1920s, 1949, 1982, 1994, 2004, 2009.

Companies offer stocks for sale in order to collect funds to expand and grow the company’s business.  Stocks are a highly liquid asset for investors, easy to get into and out of. These stock shares are sold on an exchange by Market Makers who match up buyers and sellers of the stock.

Performance of the stock market can affect overall economics for that country. Example: If the US stock market performs poorly, the US economic outlook is affected.

 

Stocks and companies are sorted into groups called sectors, industries, and subsectors.

These groups are linked by a common purpose. The Finance Sector would include the stocks of companies in banking, investing, mortgages, and other finance-related businesses.  Why does this matter? Many times companies in the same sector move in the same direction as an example over earnings.

Indexes were created to follow a select group of stocks with a particular investment theme such as asset class, industry, or sector.  Indexes do not own shares in the companies listed on that Index.
The Dow, S&P 500, Nasdaq, Russell 2000 are the major US indexes.

Exchange-Traded Funds are funds that actually own a basket of stocks in the various companies listed on the indexes that these ETFs follow. These ETFs are highly tradeable and popular among traders and investors alike.

There are two prices for every stock listed on the exchange.  Bid and Ask.  A bid is a price you can sell your stock for.  Ask is the price you can buy the stock for. The Spread is the monetary difference between the Bid and Ask.  Sometimes you can negotiate your offer to buy or sell for a small portion of the spread.

 

Bullish means the price of a stock is increasing.  Bearish means the price of a stock is decreasing.

To gain more knowledge about the stock market so you can become a trade, a better trader, or just understand what your broker is talking about, join Trading U.

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